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AP Microeconomics
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Subjects
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economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
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Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Total Fixed Costs (TFC)
Consumer surplus
Profit Maximizing Rule
Cross-Price Elasticity of Demand
2. Es = (%dQs) / (%dPrice)
Natural Monopoly
Oligopoly
Price Elasticity of Supply
Opportunity Cost
3. A good for which higher income increases demand
Non-collusive oligopoly
Marginal Benefit (MB)
Normal Goods
Price Ceiling
4. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Marginal Cost (MC)
Determinants of elasticity
Cross-Price Elasticity of Demand
Substitute Goods
5. The price of a good measured in units of currency
Surplus
Absolute prices
Price Ceiling
Subsidy
6. Ed = 1
Luxury
Producer surplus
Unit elastic demand
Market power
7. All firms maximize profit by producing where MR = MC
Average Variable Cost (AVC)
Dead Weight Loss
Four-firm concentration ratio
Profit Maximizing Rule
8. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Cross-Price Elasticity of Demand
Allocative Efficiency
Determinants of elasticity
Incidence of Tax
9. The most desirable alternative given up as the result of a decision
Spillover benefits
Monopoly
Perfect competition
Opportunity Cost
10. Ed > 1 - meaning consumers are price sensitive
Price elastic demand
Constant Returns to Scale
Break-even Point
Non-collusive oligopoly
11. TR = P * Qd
Marginal Cost (MC)
Price Elasticity of Supply
Constant cost industry
Total Revenue
12. The sum of consumer surplus and producer surplus
Total Welfare
Market Economy (Capitalism)
Positive externality
Oligopoly
13. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage
Total Product of Labor (TPL)
Normal Profit
Total variable costs (TVC)
Marginal Resource Cost (MRC)
14. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Spillover costs
Excess Capacity
Spillover benefits
Long Run
15. The additional cost incurred from the consumption of the next unit of a good or a service
Luxury
Income Effect
Resources
Marginal Cost (MC)
16. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Marginal Revenue Product (MRP)
Law of Increasing Costs
Profit Maximizing Rule
Price Ceiling
17. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Producer surplus
Accounting Profit
Price elasticity
Consumer surplus
18. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Price inelastic demand
Price Elasticity of Supply
Monopoly
Constant cost industry
19. Entry of new firms shifts the cost curves for all firms upward
Increasing Cost Industry
Price inelastic demand
Absolute prices
Monopolistic competition long-run equilibrium
20. The practice of selling essentially the same good to different groups of consumers at different prices
Least-Cost Rule
Comparative Advantage
Market Equilibrium
Price discrimination
21. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Average Product of Labor (APL)
Natural Monopoly
Short run
Total Revenue Test
22. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.
Production function
Total Revenue
Utility Maximizing Rule
Economic Growth
23. The mechanism for combining production resources - with existing technology - into finished goods and services
Production function
Marginal tax rate
Normal Goods
Constant cost industry
24. Exists if a producer can produce a good at lower opportunity cost than all other producers
Comparative Advantage
Price inelastic demand
Natural Monopoly
Perfectly inelastic
25. The ability to set the price above the perfectly competitive level
Least-Cost Rule
Normal Goods
Market power
Luxury
26. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Inferior Goods
Determinants of Demand
Price floor
Economic Profit
27. The marginal utility from consumption of more and more of that item falls over time
Law of Diminishing Marginal Utility
Implicit costs
Monopoly long-run equilibrium
Absolute Advantage
28. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Total Welfare
Marginal Resource Cost (MRC)
Cross-Price Elasticity of Demand
29. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Profit Maximizing Resource Employment
Spillover costs
Absolute Advantage
Derived Demand
30. The imbalance between limited productive resources and unlimited human wants
Scarcity
Absolute prices
Accounting Profit
Monopoly long-run equilibrium
31. Ei > 1
Luxury
Price inelastic demand
Excess Capacity
Normal Goods
32. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Surplus
Marginal Benefit (MB)
Opportunity Cost
Utility Maximizing Rule
33. The output where ATC is minimized and economic profit is zero
Productive Efficiency
Consumer surplus
Diseconomies of Scale
Break-even Point
34. A good for which higher income decreases demand
Complementary Goods
Inferior Goods
Price Ceiling
Four-firm concentration ratio
35. When firms focus their resources on production of goods for which they have comparative advantage
Shortage
Economics
Specialization
Market Equilibrium
36. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Positive externality
Perfectly elastic
Economies of Scale
Shutdown Point
37. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Marginal tax rate
Price Elasticity of Supply
Income Effect
Law of Demand
38. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Subsidy
Spillover costs
Marginal Productivity Theory
Break-even Point
39. 0 < Ei < 1
Necessity
Decreasing Cost industry
Monopolistic competition long-run equilibrium
Positive externality
40. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good
Increasing Cost Industry
Public goods
Total Fixed Costs (TFC)
Oligopoly
41. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Spillover costs
Opportunity Cost
Law of Diminishing Marginal Utility
Marginal tax rate
42. Entry of new firms shifts the cost curves for all firms downward
Decreasing Cost industry
Break-even Point
Implicit costs
Increasing Cost Industry
43. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Marginal tax rate
Market Equilibrium
Total Welfare
Total Revenue Test
44. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Monopoly
Absolute Advantage
Non-collusive oligopoly
Free-Rider Problem
45. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Law of Supply
Income Effect
Economies of Scale
Average Total Cost (ATC)
46. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Law of Increasing Costs
Monopolistic competition
Cartel
Scarcity
47. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Natural Monopoly
Determinants of Demand
Law of Diminishing Marginal Utility
48. ATC = TC/Q = AFC + AVC
Surplus
Price discrimination
Average Total Cost (ATC)
Total Welfare
49. Ed = 8 - infinite change in demand to price change
Natural Monopoly
Perfectly elastic
Variable inputs
Cartel
50. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Luxury
Economic Profit
Dead Weight Loss
Average Fixed Cost (AFC)
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